U.S. housing starts recorded their largest decline in nearly three years in January, reflecting severe winter weather in many parts of the country, but the third consecutive month of declines in building permits pointed to some underlying weakness in the housing market, the government said Wednesday.
The Commerce Department reported that housing starts fell 16 percent to an annual rate of 880,000 units, the lowest level since September. The percentage drop was the biggest since February 2011. Housing starts fell 4.8 percent in December, also driven lower by unusually cold weather.
Groundbreaking for single-family homes - the largest segment of the market - fell 15.9 percent to a 573,000-unit pace in January, the lowest level since August 2012. Starts for the volatile multi-family homes segment fell 16.3 percent to a 307,000-unit rate.
Applications for homebuilding permits - a measure of future activity - fell 5.4 percent in January to a 937,000-unit pace. It was the third consecutive month of declines and the biggest drop since June.
For all of 2013, housing starts rose 17.7 percent to 976,000 units, the best performance since 2007. Analysts expect further gains this year as stronger job growth increases housing demand.
But, while frigid temperatures have been blamed for the sharp slowdown in U.S. hiring in December and January and a decline in manufacturing output last month, not all of the weakness in recent data can be attributed to the cold weather, amid evidence the economy already was losing some momentum towards the end of 2013.